Economy
CBN retains 12% lending rate as foreign reserves hit $38b
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Tuesday in Abuja retained the Monetary Policy Rate (MPR), also known as lending rate at 12 per cent. The CBN Governor, Malam Sanusi Lamido Sanusi, said this while briefing journalists at the end of the MPC meeting. The committee meets every month to review and take monetary decisions.
Sanusi said Nigeria’s external reserves had increased to $38.72 billion as at May 17 from $36.66 billion in April, representing an 18.63 per cent increase over the level in December 2011.
“The increase reflected generally favourable commodity prices and inflows of capitals in response to the removal of restrictions on repatriations and high domestic interest rate as well as stable exchange rates. The committee noted the assurances of the bank that the total hot money in the system is under strict surveillance and that the bank is satisfied that the figure of 5 billion dollars does not pose a significant threat to the financial stability of the country in view of the current level of reserves. On the decision to retain the MPR, Sanusi said the apex bank was concerned about a slowdown in global economic activity and lower crude oil prices.
MPR is the rate at which the apex bank lends money to commercial banks for on lending to customers- this rate influences interest rates at any point in time He said the bank was equally concerned about the sharp decline in domestic oil production due to massive oil theft in Niger Delta and a drop in the agricultural output because of insecurity in some Northern states of the country.
“It was the committee’s view that at this point in time the trajectory of prices and output is more dependent on fiscal and structural policy than on monetary policy. The sluggish growth in credit, the stable exchange rate, the healthy reserve position and the benign month-by-month inflation do not suggest a need for further tightening at this point. Also the reasons given for the slowdown in our agricultural growth and oil sector will not be addressed by monetary easing.
“The decision therefore decided by unanimous vote to maintain the current stance of monetary policy without discounting the possibility of changing it should economic and financial conditions warrant such in the near term.’’
The CBN governor said the Committee also kept its +/- 200 basis point corridor while the Minimum Liquidity Ratio was retained at 30 per cent and the Cash Reserve Ratio (CRR) at 8 per cent. He said the committee was equally concerned that the increase in electricity tariff proposed for June 1 might lead to “further inflationary pressures.’’
“The Committee noted that since its meeting in March 2012, the uncertainties surrounding the global economy remained elevated owing to economic slowdown in France and major emerging economies as well as the financial threats in key emerging economies. These developments will have an impact on the domestic economy through the trade and financial flow channels weakening the external and fiscal positions.
“Monetary policy on its own has limitations with respect to inducing growth without fiscal and structural measures relating to petroleum, power and infrastructure sectors.
“The committee reiterated the need to recognise the short-term nature and limits of monetary policy. The growth and development of the Nigeria economy will continue to be risk so long as progress is not made in structural reforms.’’ Sanusi said the committee noted indications that the robust output growth recorded in 2010/2011 might not be replicated in 2012. He cited provisional data from the National Bureau of Statistics which indicates that real GDP in the first quarter of 2012 grew by 6.17 per cent down from 7.68 per cent in the fourth quarter of 2011 and 7.13 per cent in the corresponding period last year.
“Overall, real GDP growth for fiscal 2012 is projected at 6.5 per cent down from 7.45per cent in 2011.’’ This confirms a disturbing and uninterrupted trend of decline going back to Q1 2010. “Crude oil production was estimated to have declined by 2.32 percent in quarter one 2012 compared with the decline of 2.41 per cent in the corresponding period of 2011. Non oil real GDP growth estimated at 7.93 per cent in Q1 of 2012 was much lower than 8.73 per cent recorded in Q1 of 2011.’’
The CBN governor said growth in agriculture in the first quarter of 2012 also declined to 4.15 per cent compared with 5.54 per cent in Q1 of 2011 and 5.74 in fourth quarter 2011. “In general, the paradox of rising poverty incidence in the face of impressive economic growth further reinforces the committee’s call for the implementation of appropriate structural reforms in the key sectors notably agriculture, power and the petroleum sector to stimulate productivity.’
The Arab Africa Trade Bridges (AATB) Program and the Federal Republic of Nigeria formalized a partnership with the signing of the AATB Membership Agreement, officially welcoming Nigeria as the Program’s newest member country. The signing ceremony took place in Abuja on the sidelines of the 5th AATB Board of Governors Meeting, hosted by the Federal Government of Nigeria.
The Membership Agreement was signed by Eng. Adeeb Y. Al Aama, the CEO of the International Islamic Trade Finance Corporation (ITFC) and AATB Program Secretary General, and H.E. Mr. Wale Edun, Minister of Finance and Coordinating Minister of the Economy, Federal Republic of Nigeria. The Agreement will provide a strategic and operational framework to support Nigeria’s efforts in trade competitiveness, promote export diversification, strengthen priority value chains, and advance capacity-building efforts in line with national development priorities. Areas of collaboration will include trade promotion, agribusiness modernization, SME development, businessmen missions, trade facilitation, logistics efficiency, and digital trade readiness.
The Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, called for deeper trade collaboration between African and Arab nations, stressing the importance of value-added Agribusiness and industrial partnerships for regional growth. Speaking in Abuja at the Agribusiness Matchmaking Forum ahead of the AATB Board of Governors Meeting, the Minister said the shifting global economy makes it essential for African and Arab nations to rely more on regional cooperation, investment and shared markets.
He highlighted projections showing Arab-Africa trade could grow by more than US$37 billion in the next three years and urged partners to prioritize value addition rather than raw commodity exports. He noted that Nigeria’s growing industrial base and upcoming National Single Window reforms will support efficiency, investment and private-sector expansion.
“This is a moment to turn opportunity into action”, he said. “By working together, we can build stronger value chains, create jobs and support prosperity across our regions”, Edun emphasized. “As African and Arab nations embark on this journey of deeper trade collaboration, the potential for growth and development is vast. With a shared vision and commitment to value-added partnerships, we can unlock new opportunities, drive economic growth, and create a brighter future for our people.”
Speaking during the event, Eng. Adeeb Y. Al Aama, Chief Executive Officer of ITFC and Secretary General of the AATB Program, stated: “We are pleased to welcome Nigeria to be part of the AATB Program. Nigeria stands as one of Africa’s most dynamic and resilient economies in Africa, with a rapidly expanding private sector and strong potential across agribusiness, energy, manufacturing, and digital industries. Through this Membership Agreement, we look forward to collaborating closely with Nigerian institutions to strengthen value chains, expand regional market access, enhance trade finance and investment opportunities, and support the country’s development priorities.”
The signing of this Agreement underscores AATB’s continued engagement with African countries and its evolving portfolio of programs supporting trade and investment. In recent years, AATB has worked on initiatives across agribusiness, textiles, logistics, digital trade, export readiness under the AfCFTA framework, and other regional initiatives such as the Common African Agro-Parks (CAAPs) Programme.
With Nigeria’s accession, the AATB Program extends it’s presence in the region and adds a key partner working toward advancing trade-led development and fostering inclusive economic growth.
Federal Executive Council (FEC) has approved the 2026–2028 Medium-Term Expenditure Framework (MTEF), a key fiscal document that outlines Nigeria’s revenue expectations, macroeconomic assumptions, and spending priorities for the next three years. The approval followed Wednesday’s FEC meeting presided over by President Bola Tinubu at the State House, Abuja. The Minister of Budget and Economic Planning, Senator Atiku Bagudu made this known after the meeting.
The Minister said the Federal Government is projecting a total revenue inflow of N34.33 trillion in 2026, including N4.98 trillion expected from government-owned enterprises. Bagudu said that the projected revenue is N6.55 trillion lower than earlier estimates, adding that federal allocations are expected to drop by about N9.4 trillion, representing a 16% decline compared to the 2025 budget.
He said that statutory transfers are expected to amount to about N3 trillion within the same fiscal year. On macroeconomic assumptions, FEC adopted an oil production benchmark of 2.6 million barrels per day (mbpd) for 2026, although a more conservative 1.8 mbpd will be used for budgeting purposes. An oil price benchmark of $64 per barrel and an exchange rate of N1,512 per dollar were also approved.
Bagudu said the exchange rate assumption reflects projections tied to economic and political developments ahead of the 2027 general elections. He said the exchange rate assumption took into account the fiscal outlook ahead of the 2027 general elections.
The minister said that all the parameters were based on macroeconomic analysis by the Budget Office and other relevant agencies. Bagudu said FEC also reviewed comments from cabinet members before approving the Medium-Term Fiscal Expenditure Ceiling (MFTEC), which sets expenditure limits. Earlier, the Senate approved the external borrowing plan of $21.5 billion presented by President Tinubu for consideration The loans, according to the Senate, were part of the MTEF and Fiscal Strategy Paper (FSP) for the 2025 budget.
The spot rate on Nigerian Treasury bills has been increased by 146 basis points by the Central Bank of Nigeria (CBN) following tight subscription levels at the main auction on Wednesday. The spot rate on Treasury bills with one-year maturity has now surpassed Nigeria’s 16.05% inflation by 145 basis points following a recent decision to keep the policy rate at 27%.
The Apex Bank came to the primary market with N700 billion Treasury bills offer size across standard tenors, including 91-day, 182-day and 364 day maturities. Details from the auction results showed that demand settled slightly above the total offers as investors began to seek higher returns on naira assets despite disinflation.
Total subscription came in at about N775 billion versus N700 billion offers floated at the main auction. The results showed rising appetite for duration as investors parked about 90% of their bids on Nigerian Treasury bills with 364 days maturity. The CBN opened N100 billion worth of 91 days bills for subscription, but the offer received underwhelming bids totalling N44.17 billion.
The CBN allotted N42.80 billion for the short-term instrument at the spot rate of 15.30%, the same as the previous auction. Total demand for 182 days Nigerian Treasury bills settled at N33.38 billion as against N150 billion that the authority pushed out for subscription. The CBN raised N30.36 billion from 182 days bills allotted to investors at the spot rate of 15.50%, the same as the previous auction.
Investors staked N697.29 billion on N450 billion in 364-day Treasury bills that was offered for subscription. The CBN raised N636.46 billion from the longest tenor at the spot rate of 17.50%, up from 16.04% at the previous auction.
-
News3 days agoNigeria to officially tag Kidnapping as Act of Terrorism as bill passes 2nd reading in Senate
-
News3 days agoNigeria champions African-Arab trade to boost agribusiness, industrial growth
-
News3 days agoFG’s plan to tax digital currencies may push traders to into underground financing—stakeholders
-
Finance1 week agoAfreximbank successfully closed its second Samurai Bond transactions, raising JPY 81.8bn or $527m
-
Economy3 days agoMAN cries out some operators at FTZs abusing system to detriment of local manufacturers
-
News1 week agoFG launches fresh offensive against Trans-border crimes, irregular migration, ECOWAS biometric identity Card
-
News3 days agoEU to support Nigeria’s war against insecurity
-
Uncategorized3 days agoDeveloping Countries’ Debt Outflows Hit 50-Year High During 2022-2024—WBG
You must be logged in to post a comment Login